Do you know?
According to the numbers provided by Invesp, 44% of companies have a greater focus on customer acquisition when only 18% focuses on customer retention. This is where most of the e-commerce stores go wrong. Customer retention can actually provide decisive results than that of acquisition.
Investing in customer retention strategies can never go wrong and we are here to prove you the same.
Wait, before knowing why investing in customer retention is healthy for your store, we should know the fundamentals of what is customer retention.
Customer retention is investing in existing customers rather than acquiring new leads. It is important for foretelling your development in terms of financial profits. Why is it so necessary to invest in existing customers?.
Well, the list goes huge.
To start with, they are already your customers and so you need not please them often to indulge in merchandise with you. The other obvious reason is the cost of acquiring new customers, it costs 5 folds more to attract new customers than to keep going with the existing ones.
Trust the statistics, the probability of selling to an existing customer is 60-70% while the probability of selling to a new customer prospect is just 5%-20%.
As aforesaid, the following are the reasons why it is always preferable to invest in customer retention.
Table of Contents
1. Existing customers spend more
Your existing customers won't deny coupons and discounts offered by you. They are willing to spend an average of 13%, which is quite a huge term. Series of analysis says that customers are ready to spend on online stores that they are already familiar with.
Trusting in new brands or stores is mostly not preferred by people. Why do they trust in brands they have already indulged in purchases with? Because they have every idea of how purchasing with them works.
Positive experience says it all! A study by Bain and Company found that regular customers spend more leading to larger transactions.
2. Promotion is always under cost
There is even no need to promote your brands every often to your existing customers. You can save the cost of promoting, campaigning and advertising. This comes easy right?
All you got to do is to inform them on a regular basis. By this we mean, sending newsletters, notifications regarding any new offers or updates.
Cost efficient and less cumbersome is investing in customer retention. Whereas, when you draw a parallel comparison with customer acquisition, you have to be prepared to face the financial expenditures. Imagine the cost of advertising through ad campaigns and email promotions. You’ll then understand why we should focus on customer retention more.
3. Customer Retention bring in more profits
Wondering how is that possible?
Alright, you call your existing customers loyal. Why? Because more than just frequent purchasing habits, they never complain about your brand. If at all, they complain, you can consider it as feedback. Most importantly, they refer your brand to others. This is called as referrals.
When someone so familiar with your brand suggests it to the people they know, you get profits more than you expect. Word-of-mouth marketing strategy it is! No cost of promotion, yet you manage to gain a few more customers with the help of existing ones.
This is how your existing customers bring in more and more profits. Not just loyal, they are your business to a ballpark estimation.
4. Know more about a Customer’s lifetime value
Customer lifetime value is all about estimating how much a customer has invested in your company for a lifetime. By this process, you will get to understand a few important stats of how much development your brand has improved because of your existing customers.
Concentrating on customer retention can reduce your churn rates. Do you know only 42% of companies actually measure their customers lifetime value? Make sure you come under that 42 figure category. Not paying heed to calculate CLV can hinder you from achieving more profits. CLV decides the present and future of your e-commerce store.
To achieve Customer retention, come up with customer retention programs. Introduce loyalty programs by offering Next order coupons to your existing customers. Most of the stores out there spend more on customer acquisition because it is comparatively faster. However, for better outputs, concentrating on customer retention proves fruitful. Though slower, it is effective for a longer time period.
Keep in mind to remain in regular communication with your customers. At the same time, do not pester them often for feedbacks. The goal of customer retention is to achieve existing customers trust, not driving them away with frequent pestering.
Even today, only 40% of companies have an equal focus on acquisition and retention. In spite of knowing all the obvious advantages, don't turn a blind eye to customer retention strategies. Proper planning and execution can predict your company's future. Hope we have provided you with all the necessaries of why it is important to invest in customer retention.